The Dark Army is on the move again, led by the evil sorceress Scotia. Her goal is obvious: To destroy Gladstone Keep and its inhabitant King Richard. Scotia herself has recently become more powerful after acquiring "the Mask" from the Urban Mines, gaining the ability to shape shift. She is virtually unstoppable and able to infiltrate Gladstone Keep, poisoning King Richard. If it were not for the intervention of Sorceress Dawn, this monarch would surely be dead. In order to find a cure for the King's secret, a band of heroes must set out on an adventure, and keep themselves alive from the Dark Army forces.

Lands of Lore: Throne of Chaos is a real-time dungeon-crawling role-playing game viewed from first-person perspective. Players begin by choosing from four selectable hero classes, including: Mage, Warrior, Rogue, and a balanced all-round hero. Each has their weaknesses and strengths, but all abilities in this game can be upgraded.

The game does not feature manual character development, instead the game introduces a semi-automatic form of leveling up, where skills of the hero and the companions are divided into: Fighting, Magic and Rogue skills. Each skill level will increase when killing enemies using a particular type of attack: melee weapons increase the Fighting skills, magic increases the Magic skill, and ranged weapons increase the Rogue skills. In the course of the game players will form a party of up to three heroes in the quest for the cure. The player is able to equip these characters with new weapons and armor in a "paper doll" styled interface.